A stock is also known as a share or equity, this is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.
Holders of stocks in a company are called stockholder or shareholder has a claim to a part of the corporation’s assets and earnings. In other words, a shareholder is an owner of a company.
Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have a claim to 10% of the company’s assets.
There are two main types of stock: common and preferred.
Common stock usually entitles the owner to vote at shareholders’ meetings that can be exercised in corporate decisions and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.
Stocks are basically investment made in companies and are profitable over the long run. They also help you to stake a claim in company ownership.
